How Accidents and Tickets Affect Your Premium

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It makes sense that getting in an accident and filing an insurance claim will raise your insurance payments, but did you know that just getting in an accident without filing a claim or even getting a traffic ticket can raise your NY car insurance rate as well? Such increases in premiums are called “surcharges,” and they can seem extremely unfair until you realize how insurance companies operate.

Insurance companies operate on risk and probability. Your insurance premium is an expression of the statistical risk of your insurance, not direct compensation for any insurance payouts you might receive. Getting in an accident or receiving a traffic ticket makes you statistically more risky in the car insurance company’s eyes – if you get in one accident or receive one ticket, you’re more likely to receive another.

So that explains why car insurance companies adjust premiums in these circumstances, but what circumstances warrant an increase, and to what kinds of insurance premiums do the surcharges apply? To answer the latter question first, surcharges are applied to premiums on liability insurance (both bodily injury and property damage), collision insurance, and no-fault insurance coverage. Surcharges are allowable in two circumstances. Either you cause an accident resulting in more than $1,000 in damage in property or medical costs, or you’re issued a traffic violation chargeable under current insurance laws (speeding tickets, etc).

While surcharges are annoying enough, dealing with a surcharge based on an accident or ticket that didn’t happen is even worse. Insurers often consult a ratings system similar to that of credit ratings to determine premium ratings and surcharges, and that system is prone to misinformation and erroneous reporting. Insurance companies must notify you if they use any such systems to determine your premiums and surcharges, so don’t hesitate to ask for a copy of your rating report from your insurer so you can review it for erroneous information.

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